Technical and Derivatives Weekly Review - July 21, 2023

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Technical and Derivatives Review |July 21, 2023

Sell off in Reliance and IT space applies brakes on the recent run

Sensex (66684) / Nifty (19745)

Source: Tradingview.com

Future outlook

During the week, the bulls had a strong run, leading to a substantial rally of over 400 points until Thursday. However, weak guidance

from IT giant INFY triggered profit booking in the IT space, and profit booking in Reliance caused a price correction on Friday, cooling

off significantly from Thursday’s high. Eventually, Nifty ended the week with a 0.92 percent gain, tad below 19750.

Despite the impressive weekly winning streak for the fourth consecutive week, profit booking in key heavyweights on Friday slowed

down the bull run. The market's tendency to catch complacent traders off guard was previously highlighted in our outlook,

emphasizing the need to avoid undue risk. Nevertheless, the market saw some respite at lower levels on Friday, and individual

counters continued to perform well, reflecting an inherent uptrend. The market's recent multi-month breakout around the 19000

level indicates a significant bull run. However, due to the recent vertical move and overbought conditions, the next upward

movement may not be as swift as the recent run. It is anticipated that there may be a correction, either in terms of time or price, so

the ideal strategy would be to buy on dips and book profits at higher levels. The psychological mark of 20000 that was just missed

during the week remains an immediate hurdle, followed by the golden retracement target of 20100 – 20200. On the downside, the

recent congestion breakout level of 19600 – 19500 is considered immediate support, and a more significant correction may occur

only if this level is breached. Traders should closely monitor these levels and consider playing within this range.

Some recent performers like Reliance and the IT space faced downward pressure on Friday, and many sectors have already

participated in the recent run. Going ahead, finding the right theme for momentum moves may become challenging, but pockets of

outperforming opportunities might continue to emerge, especially considering the result season. Traders should focus on such

opportunities.

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Technical and Derivatives Review |July 21, 2023

Sho

Form

ion

PCR-OI corrected to 0.91 amidst last day sell-off

Nifty spot closed at 19745 this week, against a close of 19654.50 last week. The Put-Call Ratio has decreased from 1.34 to 0.91 on

Weekly basis. The annualized Cost of Carry is positive at 9.67%. The Open Interest of Nifty Futures increased by 8.05%.

Derivatives View

Nifty current month’s future closed with a premium of 31.40 against a premium of 34.35 points to its spot in the previous week.

Next month’s future is trading at a premium of 147.75 points.

The benchmark index maintained a strong stature throughout the week until a substantial fall in the IT pack, followed by Reliance,

applied a sudden break in the last session. On the derivatives front, both key indices settled the week with long addition, but the last

day sell-off has dampened the ongoing run. The stronger hands have covered some longs on the last session, resulting in a marginal

cool-off of in ‘Long Short Ratio’ to 68% from 70% on a weekly basis. On the options front, the scattered position of OI is seen from

19700-19500 put strikes, suggesting a downward shift in the immediate support base. While on the higher end, strong piling of OI is

seen at 19900-19800 call strikes indicating nearby resistance for Nifty. Considering the mentioned data, we might witness some

breather in the benchmark for the upcoming week, while any decisive breakthrough would direct the near-term trend.

Scrip

Futures

Chg (%)

Price

Chg(%)

COFORGE 982200 50.84 4649.50 (5.99)

RAMCOCEM 2921450 21.06 887.10 (4.66)

INFY 40890800 17.22 1333.75 (6.57)

SHREECEM 291225 15.96 23181.80 (4.96)

VEDL 57226000 13.87 276.15 (3.24)

Weekly change in OI

Long Formation

Scrip

Futures

Chg (%)

Price

Chg(%)

INDIAMART 1164900 49.46 3158.25 10.32

CANFINHOME 3248700 37.18 839.60 4.25

POLYCAB 1995900 24.22 4599.35 18.24

ASHOKLEY 91940000 18.05 182.35 5.83

MCDOWELL-N 13351800 17.16 1041.55 9.94

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Technical and Derivatives Review |July 21, 2023

Sameet Chavan Head Research – Technical & Derivatives sameet.chavan@angelone.in

Sneha Seth Senior Analyst – Technical & Derivatives sneha.seth@angelone.in

Rajesh Bhosale Analyst – Technical rajesh.bhosle@angelone.in

Osho Krishan Senior Analyst – Technical & Derivatives osho.krishan@angelone.in

Hitesh Rathi Analyst – Technical & Derivatives hitesh.rathi@angelone.in

Research Team Tel: 022 - 39357600 Website: www.angelone.in

For Technical Queries E-mail: technicalresearch-cso@angelone.in

For Derivative Queries E-mail: derivatives.desk@angelone.in

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Technical and Derivatives Review |July 21, 2023

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